A group of Senate Republicans is pressing bank regulators to build on recent regulatory progress by creating a clearer capital framework for crypto activities and asset treatment.
US Senators Call For Clear Crypto Capital Rules
On Thursday, Senate Banking Subcommittee on Digital Assets Chair Cynthia Lummis and Senators Dan Sullivan, Bill Hagerty, Bernie Moreno, Ted Budd, and Jon Husted shared a recent letter urging key financial agencies to move toward “clear and fair” capital rules for banks engaged in crypto asset activities.
The letter, addressed to Federal Reserve Vice Chair for Supervision Miki Bowman, Federal Deposit Insurance Corporation (FDIC) Chairman Travis Hill, and Comptroller of the Currency Jonathan Gould, criticized the international Basel Committee on Bank Supervision’s capital standards, which gave “the most punitive classification in the capital framework” to crypto assets.
Notably, the standard assigned a 1,250% risk weight, used to determine how much a bank must hold against a certain asset, on crypto assets. To the senators, “This classification was not derived from a calibrated assessment of the actual risk profile of digital assets.
Instead, it “appears to be a blanket penalty assigned by asset category as a de facto ban on banks holding this asset class, in direct tension with a technology-neutral approach” that agencies like the Office of the Comptroller of the Currency (OCC) and the FDIC have disclosed over the past year.
The lawmakers applauded the regulatory agencies for their recent interagency guidance on tokenized securities, which clarified the capital treatment of these assets. In March, the FDIC, the OCC, and the Federal Reserve jointly said that tokenized securities should generally receive the same capital treatment as their non-tokenized counterparts, affirming that capital treatment should reflect the risk characteristics of the underlying asset, not the technology used to record ownership.
“That principle should apply consistently—including to other digital assets,” the letter stated. Citing this position and recent progress on the crypto market structure bill, which would expand banks’ ability to engage in balance-sheet crypto asset activities, the senators urged the FDIC, OCC, and Federal Reserve to begin developing a new capital framework for such activities.
Top Regulators Shift To ‘Risk-Based’ Supervision
The senators’ call for new crypto capital rules came as the three regulators testified before the House Financial Services Committee on Thursday morning, updating lawmakers on their broader effort to revisit and ease several bank rules implemented after the 2008 financial crisis.
In prepared remarks, the FDIC chair noted that the agency is implementing several changes to reform its approach to a more “effective and efficient” supervisory framework that continues to support the safety of individual institutions and the broader system.
Hill stated that strong capital standards play a critical role in ensuring a resilient banking system, while driving economic growth and supporting their customers. Regarding crypto assets, he stated that the agency has issued several proposed rules to regulate and oversee subsidiaries of FDIC-supervised Insured depository institutions (IDIs) approved to issue payment stablecoins under the GENIUS Act.
Similarly, the OCC Chief affirmed that it is “returning to risk-based supervision rooted in law and emphasizing examiner judgment, not arbitrary checklists,” and reviewing past supervisory criticisms and enforcement actions.
“Our job is to facilitate, not stymie, responsible innovation,” Gould said, adding that “Our banking system will only remain relevant and trusted if it resists pressures to deny access based on political or religious beliefs or lawful business activity. We have made considerable progress in reviewing the activities of the largest national banks and are investigating complaints of alleged debanking, consistent with the President’s executive order.”
The total crypto market capitalization is at $2.18 trillion in the one-week chart. Source: TOTAL on TradingView
Featured Image from Unsplash.com, Chart from TradingView.com
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